Milwaukee Archdiocese says bankruptcy has cost it $12m

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MILWAUKEE — Bankruptcy has cost the Archdiocese of Milwaukee more than $12 million in legal fees and other expenses, and rejection of its recovery plan could force it to pay out $13 million more, its attorneys said in newly filed court documents.

The financial details were revealed in the archdiocese’s reorganization plan, filed late Wednesday night in federal bankruptcy court. The plan proposes providing $4 million to compensate an estimated 125 victims of clergy sex abuse — less than a fourth of those who filed claims — while other victims would receive therapy but no cash payment. That is the smallest per-victim payment offered by the 11 dioceses that have filed for bankruptcy in the past decade.

The archdiocese filed for bankruptcy in 2011, saying it wouldn’t have enough money if courts ruled in favor of victims who filed lawsuits. The seemingly stingy sum offered in its reorganization plan can be partly explained by a long, bitter court fight that has drained the archdiocese’s finances and its relatively unique organizational structure, which puts much church money out of reach.

In all, the archdiocese said it has spent $6.9 million on its own attorneys during bankruptcy. It estimated its creditors’ attorney costs, which bankruptcy rules require the archdiocese to pay, at nearly $5.6 million. The creditors include hundreds of sexual abuse victims along with others who are owed money.

The archdiocese filed for bankruptcy after an October 2010 offer to pay $4.6 million to 23 victims was rejected. At the time, it had only $5.6 million that wasn’t earmarked for specific purposes, according to the court documents.

Victims’ attorneys had hoped to tap into more than $100 million held in trust funds and by the archdiocese’s 202 parishes.

The archdiocese resisted, arguing that it didn’t control that money and had no right to spend it. Courts thus far have agreed.

The Milwaukee Archdiocese said that it has cut costs dramatically in recent years to come up with money to pay victims.

Its budget last year was $24 million, less than two-thirds of what it was in 2002, when the national sexual abuse scandal erupted.

The archdiocese said it keeps about $2 million on hand for cash flow, but otherwise its savings have been depleted by the scandal.